Region lacks microfinance services, report says

2012-08-10T12:00:00Z

Despite the buzz around microfinance in the region, its reach is quite inadequate and needs to touch more people’s lives in a financially sustainable manner to make a difference, a new Asian Development Bank (ADB) report released recently says.<!--more-->

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The study, Microfinance Development Strategy 2000: Sector Performance and Client Welfare, emphasises the twin goals of microfinance – reaching the poor and being financially sustainable. With microfinance becoming increasingly commercialised in the region, the study stresses the role of government and agencies such as ADB in addressing the financial needs of the poor, while at the same time ensuring the institutional sustainability of microfinance providers.

“Despite the increasing popularity of microfinance in recent years, expanding the access of poor households to institutional financial services remains a great challenge to governments and development agencies,” Director General of Independent Evaluation, Vinod Thomas says.

The study finds that the penetration of microfinance among the poor in Asia and the Pacific remains low. As of the end of 2010, some 20 per cent of the population living below the poverty level of $1.25 per day had direct access to microfinance services in 21 developing countries receiving ADB microfinance support. This level was below ADB’s goals.

Microfinance is seen in the region as an important means to helping low-income households take advantage of economic opportunities and improve living standards. But the degree to which it actually reaches the poor and improves their welfare is under public scrutiny.

ADB is one of the largest providers of microfinance support in the region. Between 2000 and 2010, it approved nearly $2.8 billion through 88 loans, grants, technical assistance operations, and private sector investments.

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